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Indian Institute of Management Ahmedabad (IIMA), a premier global management institute, today announced the launch of the IIMA-AuraArt Indian Art Index (IAIAI) in collaboration with Mumbai-based Aura Art Development Pvt Ltd (Aura Art), an art infrastructure solutions provider and specialist in art transactions.

The IAIAI comes as timely intervention for the Indian art market which despite being at a nascent stage is emerging a burgeoning market. This index is a first of its kind that trace the price appreciation journey of Indian artists at auction globally. The need is pressing as the nation has had limited experience with art indices and most purchases are still driven by a ‘gut feeling’.

In such a scenario, the IAIAI, which is based on a hedonic pricing model, will serve as a Constant-Quality Art Price Index. The index has been put together using a data-driven methodology that analyses price variations in artwork auctions of top 25 Indian artists across the globe over 20-years. IAIAI therefore can offer, art enthusiasts, financiers, insurers, and other stakeholders across the sector, data to calculate the percentage change in the likely market price of an artwork over time.

Speaking of the potential benefits of the Index, Professor Errol D’Souza, Director, IIMA, said: “Art and artists are not only to be appreciated but they also have a significant investment value. Recently, the total worth of art works auctioned in India has been nearly a hundred million dollars per year. At IIMA we are also focussed on the emerging importance and needs of the art investing community and the assets it invests in. This art price index will bring a higher degree of transparency to the realm of art investment. We believe that it will also encourage investment in art and, thus, the artists.”

Unlike financial assets which are homogenous in nature, real assets such as artwork are highly heterogenous, which is one of the primary challenges in creating a reliable index. Moreover, markets for such real assets are illiquid and thinly-traded. Artwork prices are a combination of factors related to artists, media, subject, size, etc. Thus, comparing prices across artwork varying in multiple factors is fraught with cognitive errors. An intuitive workaround is to summarize art price transactions observed in a period into a central tendency measure such as average, or median. However, indices based on central tendencies may be misleading indicators of price movements. Consider an investor who bought a Jamini Roy oil rendering of tribal culture in 2010, and today wants to assess the percent change in its price since then. But recent auctions have been dominated by relatively abstract works of Souza and Hussain. So, the average change in price is not just due to passage of time; but also due to changing quality of the artwork auctioned. This renders the index irrelevant to Roy’s work. IAIAI addresses this issue such that it is generalizable to a larger asset class despite the sample changing its quality over time.

Through its collaboration with Aura Art, IIMA analysed data provided by the former, which comprised auction results of over 9,000 artworks by the top 25 Indian artists (List of artists analysed available below), auctioned across 11 houses around the world, over a more than 20-year period, from April 1, 2001 to June 30, 2022. These artists were selected based on the number of artworks auctioned. These artists offered a critical mass of artworks adequate to be included in the index formation. The first batch of data included a total auction price worth INR 45 bi (approx. $0.75 bi @ ₹60/US$) for the whole sample period.

Professor Prashant Das, IIMA faculty who ideated the programme algorithm for development of the index, said, “As an asset class, art has a great similarity with real estate: Each asset is unique, and the market is stratified. Even if produced in multiple copies, the products are not identical. Clubbing such assets into a unified price index is an analytical challenge that we attempt to address through this index. The index is broadly relevant irrespective of which quality of art works dominated the sample over time.”

Speaking at the launch, Mr Rishiraj Sethi, Director, Aura Art Development Pvt Ltd, said, “The Art Index is a great example of a head-heart confluence, which normally results in the best of both. Our collaboration reflects a confluence of IIMA’s analytical prowess and Aura Art's grasp on esoteric factors that drive art value. We aim at measuring heartbeats of the Indian Art market.”

As in 2022, the two parties (IIMA and Aura Art) have agreed to publish quarterly price indices updated twice a year. The index will be hosted as a part of IIMA’s Misra Centre for Financial Markets and Economy:

The Misra Centre for Financial Markets and Economy at IIMA is a Centre of Excellence that conducts research on the financial markets and economy in India. The Centre is expected to provide impetus for focussed research and teaching related to financial markets within the overall framework.


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